The 29-year-old, who has played the last two seasons at Watford after arriving from Belgian outfit Anderlecht in mid-2016, has fallen out of favour at the English club who are under the ownership of the Italian Pozzo family who also control Udinese.
“Okaka is a strong point physically, good at defending the ball and getting the team up,” Udinese technical director Daniel Prade told the club’s website.
“Stefano is strong in the air and inside the penalty area.”
The four-time capped international forward has made just three substitute appearances for Watford this season.
Okaka started his career at Roma, spending seven years at the capital side where he made his first-team debut aged 16.
From 2007 he had loan spells at clubs including English side Fulham and Italian teams Bari and Parma, before joining Sampdoria for the 2014-2015 season.
Udinese are 14th in the Italian top flight.